VCs have seen the future. And it's private equity buyouts.
To follow up on Jeff O'Brien's post last week about the challenges VCs are facing, particularly with cashing out of their investments: Yesterday, the National Venture Capital Associations published results from their first-ever survey of 200 venture capitalists, in which they asked the VCs what they think will happen in 2007. Seeing as the IPO market continues to be seriously ho-hum (and only half the respondents think it will improve next year), it's no surprise that VCs are looking at alternative exit strategies more carefully. For one, they can take their IPOs overseas to foreign exchanges. For another, there's growing chatter about seeking private equity buyouts.
[NVCA President Mark] Heesen says VC firms are doing a brisk business selling companies to private equity firms — a relatively new VC trend. Fundraising by private equity firms has exploded in recent years. In the NVCA survey, 71% of VCs say sales to private equity firms will be a bigger option in 2007. So it's all aboard the private equity bandwagon. If this is the strategy, the VCs had better hope that there's more than dotcom era-like froth behind the current private equity boom. 
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